Exhibit 99.1
Discovery Laboratories Reports First Quarter Financial Results
Doylestown, PA -- May 14, 2003 -- Discovery Laboratories, Inc. (Nasdaq: DSCO), a
late-stage specialty biopharmaceutical company developing its proprietary
surfactant technology as Surfactant Replacement Therapies for respiratory
diseases, today announced financial results for the first quarter of 2003.
For the quarter ended March 31, 2003, the Company reported a net loss of $4.5
million, or $0.14 per share, on approximately 32.9 million weighted average
common shares outstanding, compared to a net loss of $3.37 million, or $0.13 per
share, on approximately 25.8 million weighted average common shares outstanding
for the same period in 2002.
The increase in the net loss primarily reflects clinical trial costs incurred
for the Company's lead product, Surfaxin(R) (which is currently in three Phase 3
trials and two Phase 2 trials for critical care patients with life threatening
respiratory disorders), as well as activities related to the development of the
Company's inhalable aerosol surfactant programs to potentially treat a variety
of respiratory conditions. The results also include a charge of $198,000 for
pre-launch commercialization activities for Surfaxin for which funding has been
provided by a secured, revolving credit facility pursuant to a collaboration
arrangement with Quintiles Transnational Corp. ("Quintiles").
The increase in the weighted average number of shares outstanding is primarily
due to approximately 822,000 common shares issued in connection with the March
2002 expansion of the strategic alliance with Laboratorios del Dr. Esteve
("Esteve") and approximately 6.4 million common shares issued to selected
institutional and accredited investors in a private offering in November 2002.
As of March 31, 2003 and March 31, 2002, there were approximately 32.9 million
and 26.4 million common shares issued and outstanding, respectively.
As of March 31, 2003, the Company had cash and investments of approximately
$14.2 million. In addition the Company has a secured revolving credit facility
of $8.5 million to $10.0 million with Quintiles. The Company may use this credit
facility for general working capital purposes but is obligated to use a majority
of the funds borrowed under this facility for pre-launch marketing of Surfaxin.
This credit facility is available for use through December 10, 2004, and monies
become available in three tranches upon satisfying certain conditions. We have
satisfied the conditions for availability of the first two tranches and as of
March 31, 2003, $5.7 million was available for borrowing and $1.65 million was
outstanding under the credit facility. The Company has a capital lease financing
arrangement with the Life Science and Technology Finance Division of General
Electric Capital Corporation that provides, subject to certain conditions, for
up to $1.0 million in financing for capital purchases. As of March 31, 2003, the
Company has used approximately $475,000 of this financing arrangement. Our
currently available financial resources will be adequate to satisfy our capital
needs into the second quarter of 2004.
Robert J. Capetola, Ph.D., President and Chief Executive Officer of Discovery
stated, "Surfactant Replacement Therapies have the potential to treat several
respiratory diseases or to prevent
respiratory conditions from becoming severe, even life-threatening, events. We
are the only company with a humanized surfactant technology platform that can be
developed into a pipeline of Surfactant Replacement Therapies tailored for
specific respiratory conditions. Our lead product, Surfaxin (a liquid
instillate), is in three Phase 3 and two Phase 2 clinical trials for critical
care patients suffering from various Respiratory Distress Syndromes. Discovery
has recently expanded its product pipeline to include inhalable aerosol
surfactant formulations and we are positioned to enter Phase 1b/2a clinical
trials for asthma and Acute Lung Injury. We remain focused on executing the
critical operational and clinical milestones necessary to build a meaningful
specialty biopharmaceutical company that has the potential to bring
groundbreaking respiratory therapies to patients with limited or no effective
treatments currently available."
Selected updates on the Company's progress in the first quarter:
o Pivotal, Multinational Landmark Phase 3 Clinical Trial for
Respiratory Distress Syndrome (RDS) in Premature Infants - This
trial is intended to provide the basis for New Drug Applications
with the FDA and other worldwide regulatory authorities. The
Company's existing base of 50 qualified clinical sites are enrolling
and treating patients in a manner that is consistent with the
expectation that this trial will be completed and data announced
early in the fourth quarter of 2003.
o Supportive Phase 3 RDS Trial - The Company is currently conducting a
supportive multinational Phase 3 trial (referred to as the
KL4-IRDS-02 Trial) to demonstrate the safety and non-inferiority of
Surfaxin compared to Curosurf(R), an approved porcine lung extract,
for the treatment of Respiratory Distress Syndrome in premature
infants. The Company is evaluating whether to conclude this trial
early to conserve financial resources and reallocate clinical
resources to its pivotal Phase 3 trial.
o Part B, Phase 2 Clinical Trial for Acute Respiratory Distress
Syndrome in Adults (ARDS) - Enrollment for this trial is expected to
be completed in the fourth quarter of 2003. Akorn, Inc., the
Company's contract manufacturer for Surfaxin for this trial,
informed us previously that certain operating difficulties
experienced in one of its production rooms, primarily used for the
filling of sterile pharmaceuticals, had been rectified and that the
room had been returned to operational status. Manufacturing
activities for Surfaxin for our ARDS trial recommenced in March 2003
and certain filling-related processes, solely related to Akorn's
sterile filling room, needed additional attention. These issues have
been addressed to the satisfaction of the Company's manufacturing
personnel and the Company believes that Akorn will be on schedule to
recommence Surfaxin manufacture for this trial by the end of May
2003.
o Surfaxin Manufacturing - In light of the late stage development
status of Surfaxin, the ongoing implementation of the Company's
commercialization strategy, and in preparation for its inhalable
aerosol clinical programs, the Company is evaluating several
additional contract manufacturing sites and investing in
manufacturing scale-up and enhancements, including equipment. The
Company expects to select its second
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contract manufacturer in the second quarter of 2003 and have this
additional manufacturing capability operational by the fourth
quarter of 2003.
o Inhalable Aerosol Surfactant Formulations - The Company aerosolized
its humanized lung surfactant as an inhalable liquid formulation
that retained the essential pharmacological properties of a
functioning surfactant (i.e., the surface-tension lowering ability
necessary to restore lung function and keep airways open and
expanded) and could achieve delivery rates necessary for therapeutic
dosing in an appropriate time period. The Company believes that
Surfactant Replacement Therapy for respiratory medicine has now
evolved to where aerosol formulations of engineered lung surfactant
have the potential to be developed to treat a broad range of
respiratory diseases.
o SARS and Surfactant Replacement Therapies - On Wednesday, May 7,
2003, Dr. Robert J. Capetola testified before the House Committee on
Energy and Commerce Subcommittee on Oversight and Investigations
regarding the possible application of the Company's Surfactant
Replacement Therapy programs to address Severe Acute Respiratory
Syndrome (SARS). SARS is an acute respiratory illness in which
patients have difficulty breathing. Dr. Capetola informed the
Committee that Surfactant Replacement Therapy has the potential to
play an important role in addressing the SARS crisis because it is
intended to maintain or restore proper lung function. If the
necessary activities, parties and adequate resources could be
properly organized, Surfactant Replacement Therapy could be
evaluated for the most severe SARS patients on mechanical
ventilation as early as mid-to-late-summer of 2003, and inhalable
surfactant aerosol formulations could be evaluated for maintaining
lung function in SARS patients by fall of 2003.
o Anti-Inflammatory Properties - Research at the University of
Pennsylvania Department of Medicine, Pulmonary, Allergy and Critical
Care Division established that Discovery's humanized lung
surfactant, including Surfaxin, exhibits significant
anti-inflammatory properties in the lungs. Many respiratory
diseases, such as Acute Respiratory Distress Syndrome, Acute Lung
Injury, asthma, and chronic obstructive pulmonary disease (COPD),
are associated with an inflammatory event and degradation of natural
lung surfactant.
About Discovery Laboratories
Discovery Laboratories, Inc. is a specialty biopharmaceutical company developing
its proprietary surfactant technology as Surfactant Replacement Therapies for
respiratory diseases including Respiratory Distress Syndromes, Acute Lung Injury
(ALI), asthma, Chronic Obstructive Pulmonary Disease (COPD), and upper airway
disorders. Discovery's surfactant technology produces an engineered version of
natural human lung surfactant that is designed to precisely mimic the essential
properties of human lung surfactant. Discovery believes that through its
surfactant technology, pulmonary surfactants have the potential, for the first
time, to be developed into a series of respiratory therapies for hospitalized
and ambulatory patients. Surfaxin, Discovery's lead product, is in three Phase 3
and two Phase 2 clinical trials for critical care patients with life-threatening
respiratory disorders where there are few or no approved therapies available.
Discovery's first aerosol surfactant product is positioned to enter clinical
trials for hospital patients with severe asthma
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or acute lung injury. Discovery has a commercialization alliance with Quintiles
Transnational Corp. and a strategic alliance with Laboratorios del Dr. Esteve
S.A.
Interested parties can receive corporate updates by sending their email
addresses to dsco@focuspartners.com.
To the extent that statements in this press release are not strictly historical,
including statements as to business strategy, outlook, objectives, future
milestones, plans, intentions, goals, future financial conditions, future
collaboration agreements, the success of the Company's product development,
events conditioned on stockholder or other approval, or otherwise as to future
events, such statements are forward-looking, and are made pursuant to the safe
harbor provisions of the Securities Litigation Reform Act of 1995. The
forward-looking statements contained in this release are subject to certain
risks and uncertainties that could cause actual results to differ materially
from the statements made. Among the factors which could affect the company's
actual results and could cause results to differ from those contained in the
forward-looking statements contained herein are the risk that financial
conditions may change, risks relating to the progress of the company's research
and development, the risk that the Company will not be able to raise additional
capital or enter into additional collaboration agreements (including strategic
alliances for our aerosol and Surfactant Replacement Therapies), risks relating
to the progress of the Company's research and development, risks relating to the
lack of sufficient drug product for completion of any of the Company's clinical
studies, and risks relating to the development of competing therapies and/or
technologies by other companies. Those associated risks and others are further
described in the company's filings with the Securities and Exchange Commission
including the most recent reports on Forms 10-K, 10-KSB, 8-K, 10-QSB and 10-Q,
and amendments thereto.
(tables to follow)
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Discovery Laboratories, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three months ended
March 31,
2003 2002
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Revenues from collaborative agreements $ 393 $ 237
Operating expenses
Research and Development 3,844 2,605
General and Administrative 1,167 1,132
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Total Expenses 5,011 3,737
Operating loss (4,618) (3,500)
Other income and expense (net) 113 130
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Net loss $ (4,505) $ (3,370)
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Net loss per common share $ (0.14) $ (0.13)
Weighted average number of common shares outstanding 32,857 25,834
Condensed Consolidated Balance Sheets
(in thousands)
March 31, December 31,
2003 2002
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ASSETS (unaudited)
Current assets:
Cash, cash equivalents and available-for-sale marketable securities $ 14,170 $ 19,192
Prepaid expenses and other current assets 259 325
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Total current assets 14,429 19,517
Property and equipment, net of depreciation 1,409 1,231
Other assets 302 314
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Total assets $ 16,140 $ 21,062
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LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities $ 2,805 $ 3,202
Deferred revenue 1,213 1,393
Credit facility with corporate partner 1,648 1,450
Capitalized lease 348 256
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Total liabilities 6,014 6,301
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Stockholders' equity 10,126 14,761
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Total liabilities and stockholders' equity $ 16,140 $ 21,062
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